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Quick takes: Singapore's NODX contraction pace eases in April, but outlook still weak

Singapore's non-oil domestic exports (NODX) continued to decline in April, albeit at a softer pace.

SINGAPORE'S non-oil domestic exports (NODX) continued to decline in April, albeit at a softer pace.

On Tuesday, trade promotion agency International Enterprise Singapore said NODX fell by 7.9 per cent in April to S$13.3 billion compared to a year ago following a 15.7 per cent contraction in March, due to a decline in both electronic and non-electronic NODX.

NODX to all of the top 10 NODX markets, except the European Union 28 and Hong Kong, declined from a year ago. The largest contributors to the contraction were Taiwan, South Korea and Indonesia.

Here are some economists' comments:

Weiwen Ng, economist, Asean and Pacific, ANZ Research:

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"The pace of contraction in Singapore NODX eased, with manufacturing exports supported by fading drags from global inventory correction.

"Still, export data from Singapore as well as the region confirm persistent cyclical and structural pressures on Asian trade.

"The abating of growth momentum and probable scaling back of aggressive monetary easing in China will pose a significant headwind for Singapore given our high economic beta to the Chinese economy.

"Should the dismal export print persist or worsen, it will raise the odds of downside risks to Singapore's growth and put an October MAS (Monetary Authority of Singapore) easing into, though that's not our base case at this juncture."

Nomura Global Research:

"Electronics exports remained weak, declining 7.4 per cent year-on-year (y-o-y) in April after falling by 9.1 per cent in March. In sequential terms, the official press release stated that seasonally adjusted electronics exports were flat, in contrast to the expansion in non-electronics exports.

"Exports of pharmaceuticals, which tend to be volatile, surged by 17.9 per cent y-o-y in April after a sharp 30.9 per cent decline in March, helping reduce the contraction in headline NODX.

"Excluding pharmaceuticals, we estimate NODX growth barely improved at -11.3 per cent y-o-y from -13.4 per cent in March, suggesting a still weak underlying picture.

"By destination, the decline in NODX growth was led by Korea (-26.7 per cent), Taiwan (-22.5 per cent), Indonesia (-20.4 per cent) and Japan (-10.1 per cent).

"Overall, the data remain consistent with our view that the outlook for the Singapore economy remains weak. We note that non-oil re-export (NORX) growth, which is linked to the wholesale trade services sector, also remained weak at -2.8 per cent y-o-y in April from -3.0 per cent in March. This suggests services activity will likely remain soft into Q2. We reiterate our 2016 GDP growth forecast of 1.8 per cent, slowing from 2.0 per cent in 2015."

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